Price & Time: Watching the Commodity Bloc

This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be obtained.

- USD/CHF has moved steadily higher since finding demand at the start of the month just under the 61.8% retracement of the October 2011 to July 2012 advacne

- Focus is to the upside with the 50% retracement of the same move in the .9270 area now immediate resistance

- A clear push over this level is need to trigger a more important push higher towards various Fibonacci and Gann levels over the .9300 handle

- The 50% retracement of the year-to-date range near .9200 is now immediate support with weakness under this level required to undermine the immediate positive picture

- Shorter cycles warn that a reversal could be attempted over the next couple of days

Strategy: We like holding longs while over .9200, but with the near-term cyclical picture getting a little more negative over the next few days we are getting wary of a potential reversal. Tighten stops.

This is an important week for the commodity bloc from a timing perspective. A Pi frequency related to last year’s June low in these currencies suggests strong potential for a turn of some significance this week. On this note it is worth noting that NZD/USD recorded its highest level since September of 2011 on Friday. Such action would normally be quite bullish from a technical perspective, but given the possible cycle at play we can’t help but wonder if a peak of some sort is going to be seen. The price action over the next few days should be key. We will be closely watching the second square root progression from Friday’s high near .8350 as a close under this level would be a good sign that a turn is indeed being witnessed in the Bird.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

Trending Now

Quotes are real-time for NASDAQ, NYSE, and NYSEAmex when available. See also delay times for other exchanges. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.